Interrogation of the financial viability of the businesses falling under the state arms company, Denel, may expose some skeletons, its CEO, Shaun Liebenberg, has warned MPs.
According to the announcements, tablings and committee reports issued at Parliament on Tuesday — reporting on recent interaction between members of the public enterprises portfolio committee and Denel — Liebenberg is quoted as saying that as “the interrogation of the financial viability of the businesses deepened, we must accept that skeletons will come out of the closet”.
“It might sound like bad news, but in fact it’s good news, because we are cleaning up the business. There are some transgressions of the Companies Act and the Public Finance Management Act that might emerge,” he is reported as telling MPs.
The reports note that although Denel made substantial progress towards compliance with the two Acts, it did not fully comply. “In terms of section 45 of the Auditing Profession Act, the joint external auditors were required to report statutory non-compliance to the Independent Regulatory Board for Auditors [Irba], even though Denel did not experience any material loss.”
Denel had responded to the auditors on all the issues raised and the auditors submitted an updated response to the Irba, stating that Denel has put or is putting processes in place to address the non-compliance issues.
“In some instances, the auditors confirmed that the matters have been resolved to their satisfaction, while in others Denel has given an undertaking to address the non-compliance issues during the current financial year.”
The report also notes that at the end of the 2005/06 financial year Denel had a staff of 8 200 — 29% Africans, 53% whites, 17% coloureds and 1% Indians. At senior management levels there were 79% whites, “an increase from the previous year’s 73%. The increase resulted from the redesignation of jobs that came about with the unbundling of businesses.”
The staff was reduced by 1 249 during the year. There were 490 resignations and 759 retrenchments. Of the latter, 265 were provided with start-up capital of R10 000 each after the submission of an approved business plan “and they ventured into their own businesses”.
A total of 717 retrenchees received funds for themselves or their dependants to continue with further studies. A total of 322 received financial counselling.
Liebenberg is reported to have told MPs that “we will probably see a further reduction of workers in Denel, but not in the defence industry as the companies outsourced to will need those workers”. — I-Net Bridge